asked the Taoiseach whether in the light of recent developments he now wishes to revise his prediction to the Irish Management Institute on 13 May 1986, that we are facing an environment of lower interest rates with long term interest rates likely to fall somewhat further and short term interest rates falling considerably further.
Ceisteanna—Questions. Oral Answers. - Interest Rates.
6.
On 13 May 1986, the prime overdraft rate of the associated banks stood at 12½ per cent having fallen from 15½ per cent since early April. In line with the improving outlook for inflation and for the current balance of payments deficit, the associated banks prime overdraft rate fell further to 11¼ per cent between 21 and 23 May and to 10 per cent around mid-June, its lowest level since 1978 at which it remained for several months until mid-October. These moves towards lower interest rates, which I predicted on 13 May, have recently been interrupted by speculative outflows from the economy, a particularly disappointing development in the light of the continued sharp fall in inflation and the improvement in the current balance of payments deficit. But the measures announced in the Government statement of 16 October 1986, have led to an easing on interbank rates by up to 1¼ percentage points, up to lunchtime today, and to a considerable improvement in market sentiment. I am confident that when the present temporary problems are resolved there will be scope to resume the earlier downward movement of interest rates.
The unfortunate position for the Taoiseach is that, in spite of all that rigmarole, interest rates are rising. Would the Taoiseach——
(Interruptions.)
Order, please.
I will leave the Deputy to the tender mercies of Deputy Skelly. Would the Taoiseach regard it as unfair of me, or slightly exaggerated, if I were to say that when it comes to predicting economic matters such as the rate of unemployment, the current budget deficit and interest rates he is as much use to this House as Old Moore's Almanac?
Even Old Moore's Almanac gets it right sometimes.
I am not a regular reader of that particular volume but in respect of the matter raised by the Deputy the accuracy of my prediction was shown in the months that followed. As I have pointed out, there were significant falls in interest rates in that period. What has happened recently is a different matter altogether and arises from events which are, in large measure, as the Deputy knows, outside our control and would be as much outside his control if he were, unhappily, here as they are outside our control with me here.